The Bank of Canada on Wednesday announced that the interest rates will stay at the same levels mostly due to the global economic uncertainty. Earlier this year, I attended the annual MBABC Conference which was conveniently held in my backyard of beautiful Vancouver. Keynote speaker Benjamin Tal - Senior Economist for CIBC took over an hour to update us on his views. One of the many things that stuck with me was his comment about the current economy. He mentioned that is was an "unusually uncertain economic situation."
I think this is true today and is a key indication that interest rates are staying at record low levels, and will continue to do so for most likely a while longer. Rob McLister of CMT reported that the next Bank of Canada update in October should yield the same results; no rate increase. In fact, traders are currently pricing in a 20% probability that the Bank of Canada will actually cut rates even more.
The term "Overnight Lending Rate" has probably presented itself here and there. You may be asking yourself, "What is the Overnight Lending Rate?...and why do I care?" Well good point, the Overnight Lending Rate refers to the rate at which banks lend and borrow money amongst themselves. The Overnight Rate is the amount paid to the bank for lending the funds. The Bank of Canada sets a target level or "key interest rate"/"key policy rate." There are 8 fixed dates per year which the Bank of Canada announces it's decision on whether to change the rates.
You should take note of where your current financial situation is today because it could change significantly in the future should interest rates start to rise. You should make it a priority to pay down your debts or owe less for when the interest rates do in fact rise. This will allow you to have a restful sleep at night.
In addition to paying down your debts, consider a variable rate mortgage. Interest rates are currently below 3% and if you're in a fixed rate mortgage at the moment that may be topping 5%, it may be a good time to consider switching. Depending on your situation, you could save a significant amount of money over the short term. Call me today and we can look at your portfolio.
The good old high interest rate credit cards are not really influenced by the Bank of Canada, but they could be the demise of you. Focus on paying these off first and foremost, or consider a line of credit or consumer loan to consolidate the balance to a much lower rate.
As always, I encourage you to contact me if you have any questions with your current mortgage or are looking for one. Please find me on facebook at Jason Nesseth l Mortgage Specialist l British Columbia and on twitter @jasonmortgages.
"Working with you for the life of your mortgage!"
Jason Nesseth with TMG The Mortgage Group Canada Inc. If you have any questions or comments about this blog, please feel free to call Jason at 604.375.7375, email jason.n@mortgagegroup.com or visit his website at jasonnesseth.com